Consumer Investment Mirrors Broader Economy

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

The next exchange-traded fund (ETF) in this series on Select Sector ETFs covers the consumer discretionary sector, which accounts for about 13% of components in the S&P 500. The Consumer Discretionary Select Sector ETF (XLY), known until 2002 as the Cyclical/Transportation Select Sector SPDR, invests in companies in the Consumer Discretionary Select Sector Index and covers areas of the market that sell nonessential goods and services.

In other words, these are goods and services that people will spend more money on when economic sentiment is higher. This area can include media, restaurants, apparel, automobile and household durables businesses.

View the current price, volume, performance and top 10 holdings of XLY at

As the state of the consumer discretionary sector is heavily dictated by the condition and sentiment of the market, it comes as no surprise that XLY’s price, shown below, rallied along with the market during October. XLY is up more than 13% from its low in late August. Its dividend yield currently sits at 1.3%. In addition, XLY has an expense ratio of only 0.15% and a hefty $11.5 billion in assets managed.


XLY’s top 10 holdings are from a wide variety of industries and backgrounds, reflecting the breadth of this “focused” sector, and total slightly less than 50% of the fund’s assets. Online sales giant Amazon (AMZN) is XLY’s top holding, with close to 10% of total assets. The second and third places are taken by the Walt Disney Company (DIS), with 7.31% of assets, and Home Depot, Inc. (HD), with 6.57% of assets. Rounding out the top five holdings are media company Comcast (CMCSA) and fast-food restaurant McDonald’s (MCD), with 6.57% and 5.48% of assets, respectively.

If a consumer discretionary fund that can potentially benefit during bull market conditions seems appealing, you may want to take a look at Consumer Discretionary Select Sector ETF (XLY). In this column next week, I’ll have another sector highlighted for your consideration.

View the current price, volume, performance and top 10 holdings of XLY at

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

In case you missed it, I encourage you to read my e-letter column from last week about a financial sector fund that holds many big names. I also invite you to comment in the space provided below.

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